British bookmaker William Hill has rejected a £3.6bn (€4.2bn) joint takeover offer from rival betting services firms Rank and 888 Holdings, saying the approach “substantially undervalues” its business.
Interest from Rank and 888 had been reported last month and William Hill yesterday confirmed that it had received an unsolicited bid aimed at combining the three entities.
Rank switched its focus from films and cinema to the gaming industry 10 years ago and now focuses on online gaming, casino ownership and bingo clubs, through its ownership of leading UK brand Mecca Bingo.
It and online gaming specialst 888 had hoped to merge their interests with leading traditional bookmaker William Hill as consolidation ramps up across the industry.
However, in a statement yesterday, William Hill said its board “does not believe that a combination of William Hill with 888 and Rank will enhance strategic positioning or deliver superior value for shareholders compared against [its own] strategy, which is focused on increasing the group’s diversification by growing its digital and international businesses”.
William Hill’s share price rose by over 7% in early trading, yesterday, on the initial news of the merger offer.
However, that increase was pretty much eroded after the rejection statement was published to the London Stock Exchange later in the day.
Earlier this month, William Hill announced the acquisition of betting and gaming software provider Grand Parade in a £13.6m deal aimed at tackling its problems in getting to grips with the challenges of online.
It also recently sacked its chief executive James Henderson — after only two years in the job — after the board lost patience with the pace of growth, particularly in online, under his stewardship.
The company looks set to lose its market leadership position in the UK after Ladbrokes concludes its merger with Coral.
Last week, William Hill reported a 16% annualised decline in first half operating profit to £131m, but a 1% rise in interim revenues to £814m.
Chairman Gareth Davis yesterday said the group has a strong team to deliver its strategy, so shareholders should take “no action” regarding the Rank/888 offer.
“This conditional proposal substantially undervalues William Hill, is highly opportunistic and does not reflect the inherent value of the business,” he said.
© Irish Examiner Ltd. All rights reserved